Development level of hosting areas and the impact of refugees on natives’ labor market outcomes in Turkey

Doğu Tan Aracı, Murat Demirci, Murat Güray Kırdar

European Economic Review, Volume 145 (2022), Article 104132


This article examines how the impact of large inflows of Syrian refugees on natives’ labor market outcomes varies with the development level of hosting regions in Türkiye.

Türkiye is the largest host of Syrian refugees, who number 3.6 million and account for 4.4 percent of Türkiye’s population. On average, Syrian refugees are younger and less educated than Turkish natives, and almost all employed refugees are working in the informal sector. Five regions bordering or close to Syria host large numbers of Syrian refugees relative to their populations; these are Gaziantep Region, Hatay Region, Sanliurfa Region, Adana Region, and Mardin Region. There is significant variation in development levels across refugee hosting regions.

The analysis is based on three main sources of data: (a) demographic and labor market data for natives from the 2004–2015 Turkish Household Labor Force Surveys; (b) regional refugee numbers from the Turkish Disaster and Emergency Management Authority (2012 and 2013), Erdogan (2014), and the Turkish Directorate General of Migration Management (2015); and (c) estimates of regional development from the socioeconomic Development Index for 2011 (prior to the arrival of refugees), prepared by the Turkish Ministry of Development.

The authors first compare the actual labor market outcomes after the arrival of refugees to a region with the counterfactual outcomes that would have been observed in the absence of refugees in that region. The counterfactual outcomes are inferred from “synthetic control” regions, i.e., artificial regions constructed by the authors based on data from regions hosting few refugees. The authors use a regression analysis to estimate the relationship between the impact of refugees and the development level of host regions.

Main results:

  • At the mean level of development there are heterogenous effects of refugee inflows on labor market outcomes, when comparing men and women, the formal and informal labor markets, and wage versus non-wage employment. For native men, refugee inflows increase formal employment and decrease informal employment, but have no effect on overall employment. Refugee inflows also increase non-wage employment at the expense of wage employment, reduce both wages and wage employment in the informal sector, and increase wage employment in the formal sector. For native women, refugee inflows reduce total employment and labor force participation, reduce non-wage employment, and reduce wages in the informal sector.
  • For both native men and women, the impact of refugee inflows on total employment and formal employment becomes more positive as regional development rises. For native men, the refugee impact on men’s employment and formal employment becomes more positive as regional development rises. For native women, adverse effects of refugee inflows on employment and labor force participation emerge only at the mean or lower levels of development, and these adverse effects diminish as regional development rises.
  • Inflows of refugees increase the unemployment rates only at low levels of development, for both native men and women (i.e., below the mean level).
  • The transition of native workers from informal to formal employment because of the arrival of refugees is stronger in more developed regions. The impact of the refugee shock on non-wage workers among men, wage workers among women (both in terms of employment and wages), and wage workers among men (in terms of wages only) becomes more positive as regional development rises. Additionally, the transition from the informal to the formal sector (particularly in the manufacturing and service sectors) accelerates both for male and female wage workers as regional development increases.

The authors conclude that, overall, the impact of the refugees on both men’s and women’s labor market outcomes becomes more positive as the development level of hosting regions rises. They offer a few possible explanations for these results. First, the refugee impact on native employment is more adverse in less developed regions because young and less-educated refugees are closer substitutes for natives in these regions. Second, job opportunities in the formal service and manufacturing sectors are more common in developed regions. And third, there have been more numerous new firm openings in more developed regions, which are likely to have increased the demand for labor and diminished the adverse effects of refugees on native employment.

The authors suggest three policy implications of these results: (1) restrictions on the movement of refugees to more developed regions of host countries are negative for natives’ labor market outcomes; (2) locating refugee camps in more developed regions could aid the absorption of refugees and benefit natives; and (3) the labor market cost of hosting refugees is lower for natives of more d8veloped countries.

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